Frederic Heine joins Money on the Left to discuss his recent essay, “Performing Hard Money: Monetary Policy, Metaphor and Masculinity in the Making of the EMU,” published this summer in the Journal of Cultural Economy. Heine is a university assistant at the Institute for Women’s and Gender Studies at Johannes Kepler University, Linz (Austria). In his essay, Heine analyzes the cluster of masculine metaphors that ground and mobilize the European Monetary Union’s (EMU) hard-line opposition to “soft” money politics. At the time of this episode’s publishing in early September 2022, what Heine classifies as the masculine performative agency of EMU leaders can be seen all over Europe, with French President Macron decrying the end of abundance and the European Central Bank signaling a coming period of sacrifice across the Eurozone. We speak with Heine about this essay as well as his broader inquiry into the intersections of gender, global finance, and political economy.

See Frederic Heine’s essay here.

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Transcript

The following was transcribed by Mercedes Ohlen and has been lightly edited for clarity.

Scott Ferguson: Frederic Heine, welcome to Money on the Left. 

Frederic Heine: Thank you very much for having me. 

Scott Ferguson: To kick things off, can you tell our listeners a bit about your background, be it personal or professional or both, and what brought you to the study of gender, culture and political economy? 

Frederic Heine: I am currently working as a lecturer, or university assistant, at Johannes Kepler University (Linz) at the Institute of Women’s and Gender Studies. I did a PhD at the University of Warwick, and before that I did a master’s in global political economy at the University of Sussex. That’s my academic background. Before that, I studied at the Free University of Berlin, the place where I got interested in gender in political economy. 

Basically, at the Institute for… Political economy, Marxism, feminism. And led me to ask all these questions. And at the same time, shortly after I started, there was also the beginning of the first signs of the global financial crisis kicking in. So that was a big part of me being interested in trying to understand what was happening there. And at the same time, maybe gender and masculinity has been something that had been a more… permanent [interest] in my background. I needed the inspiration by the feminist flare at the university. But then I started questioning masculinity and relating it back to my own experiences of gender masculinity, some gender-related bullying in my youth.

When I came across Roman Connell’s work on hegemonic masculinity and subordinate masculinity, hierarchies of masculinity, that was very much a game changer in understanding my own identity, and also my place within the larger agenda structures in some ways. But at the same time, as male at birth and with a masculine self-presentation, I also experience it very much as a privilege, especially in combination with whiteness. For example, the attribution and assumption of competence, and even some level of authority now that I get older, which seems a little absurd at times.

In any case, that’s my background: On the one hand, there were these big macro events, like the global financial crisis that I was trying to understand. And on the other hand, this understanding of my own identity within that context. I think the tension between those macro events and identity/subjectivity, on the other hand, was what maybe always kept me in this interest about how gender and political economy relate, especially, of course, when I discovered feminist political economy as a sub-discipline, when I came to the UK and discovered IPE [International Political Economy] and the complexity and diversity of approaches. And feminist IPE in particular. That shaped a lot of the ways in which I was approaching these questions.

William Saas: Thank you for that really great answer. We’ve come to your work by way of an article you’ve published very recently in the Journal of Cultural Economy, titled “Performing Hard Money: Monetary Policy, Metaphor and Masculinity in the Making of EMU.” I wonder if by way of starting our conversation and making sure that we all have a common ground or grammar to work with, could you share with listeners who may not know what the EMU is, where it came from, and maybe its role in shaping the neoliberal project in Europe and beyond?

Frederic Heine: The European Monetary Union, the EMU, is the monetary aspect of European integration. It’s the institutional context for the single currency that probably all listeners know, which is the Euro, a currency that was first meant as a currency for the entire European Union, but a number of countries decided not to participate or haven’t adopted the Euro yet. The European Monetary Union is governed by the European System of Central Banks, comprised of National Central Banks, and, at the top, the European Central Bank. 

The idea of some kind of monetary union to proceed with economic integration and political integration has been a long time in the making. Since the first proposals in the 1970s, there has been ever closer European economic integration. As a background to these proposals, that meant that a single currency seemed desirable for economic and political reasons. 

And even before the European Monetary Union, there had been several attempts to reduce currency fluctuations between European Union and European European Community member states, trying to keep exchange rates and inflation rates somewhat aligned, mostly to foster trade and mutual investment. And that had been the case ever since the collapse of the Bretton Woods system of fixed exchange rates. This is the background why the project was taken in the first instance. And ultimately, this process cumulated in suggestions for a European Monetary Union, a single currency, and so on.

The crux, however, is not so much in the fact that we do now have a currency union, but the kind of currency union we have. Instead of an integration of financial policies and monetary policies, only monetary policy is Europeanized and institutionalized in the European Central Bank. And while there are some restrictive rules for member states, which are also arbitrary rules for how much debt and how high a deficit they can run, there isn’t a political mechanism by which, for example, an expansionary fiscal policy approach could be coordinated. And worse, that’s partly on the insistence of of the Bundesbank [the German central bank], which we will talk about. 

There’s the “no bailout clause” that forbids the European Central Bank to act as a lender of last resort for member states. So the monetary union ended up as a setup that works okay in normal times, but in times of crisis seriously limits the room for maneuver, for example, the demand-led recovery from crisis. And we know all this because of what actually happened in the Eurozone Crisis from 2010 onward. So that’s what we experienced as a result of that.

William Saas: And how have critics and critical scholars engaged with the EMU previously?

Frederic Heine: There has been a lot of attention, especially since the Eurozone Crisis, on the institutional side of of the European Monetary Union. And there’s a literature that looks at the evolution and institutional design of the European Monetary Union and regards it as more or less as institutionally flawed, a result of political compromises between the main players, especially France, Germany, etc. It also looks at the power politics between the main major nations, so this is the intergovernmentalist approach to how the European Monetary Union formed. 

There is also a literature that looks at the relevance of ideas, and especially the emerging neoliberal consensus as discussed by [Kathleen] McNamara, for example–how, in the process of creating the European Monetary Union, there was an increasing shift towards the understanding that a central bank should be independent, that the nation-states should have a limited room for maneuver to run deficits, that welfare states should be reduced.

These elements are also part of the institutional setup of the European Monetary Union by design. And that is the focus of an interpretation that looks at the European Monetary Union mostly as a result of class politics, an institutionalization of neoliberal principles by constitutionalizing them, by setting them up in the treaties of the European Union, and therefore making them uncontestable (by the labor movement especially). And in the way of central bank independence, and this focus on price stability, rather than other central banks also are concerned with making sure that there’s full employment or that levels of employment are as high as possible. This is not within the remit of the  European Central Bank. And so it’s also seen as a way of, through monetary policy, limiting the room for maneuver of trade unions and the labor movement.

Scott Ferguson: In your essay, you take up from a critical perspective what you call “gendered performative agency.” Can you define “gendered performative agency” for our listeners? And why, on your reasoning, does it matter for critically understanding the EMU?

Frederic Heine: One reason why I wanted to do this, and one thing that I haven’t seen in that literature that looks at the evolution of the European Monetary Union was to look at: Did gender plays a role in all of this? I tried to do this with that concept of gender performative agency. And it might get a bit abstract now, but basically, I was looking for a way to conceptualize how gender discourses and narratives might matter in economic governance. 

I tried to do this without reifying either what gender is or what exactly the economy is, and rather understand it as the result of these kinds of processes. Very briefly, it’s a lens that focuses on how agents mobilize performances and constructions of masculinities and femininities in their political discourse in their practices, to serve specific agendas within economic governance. And I use the term “performative” because in this way, this process both describes the performances involved in it: speeches, language, but also bodies, mannerism, dress, etc. I invoke the concept of performativity, the idea that language doesn’t only passively represent the kind of things that describes, but that it has at least some power in shaping it. A very basic example would be that if a child is told that it has a certain gender at birth, and then later is told and demonstrated what it means to be that gender, to perform the gender, then there’s a likelihood that it will behave according to these ideas as well. 

Although, of course, there’s always a chance of failure, and of a critical questioning of these. But basically, the idea is that that language doesn’t just represent something that is outside of it, but does create what it describes, in some ways, and through mechanisms and social practices. This idea has been developed in relation to gender famously by Judith Butler, as the listeners will probably know, and also in relation to the economy by scholars such as Michel Callon and others.

In a sense, I tried to capture how the economy is gendered through this performative language. And then, I looked at how these practices are very much leveraged by actors within economic governance. If we look at elite actors, such as the Bundesbankers in the paper, that have also a lot of moral authorit,y as I will explain hopefully, later. So even though single actors always have limited performative agencym as Butler argues, they still have comparatively more than you and me, for example. 

I argue that this agency and performing the economy is gendered because gender is not always but often a central component of our subjectivity and our worldviews, and even if we’re not necessarily aware of it, it shapes us. For example, V. Spike Peterson argues very deeply how we ascribe cultural value, effective value to things simply because the dominant worldviews are still very much gendered. And for this, studying how gendered meanings are mobilized, basically, look at language and metaphors. I hope this wasn’t too abstract.

Scott Ferguson: It was really clear, thank you. I really want us to spend some time as you do in the paper, unpacking these metaphors. Why metaphor? What are the metaphors? How are they being mobilized? How do they work through very often hierarchical binary oppositions that position certain terms as subordinate? As lesser? And then also how do these potentially change over time?

Maybe, to get things going, I just want to say one of the many things I appreciate so much about your work, is that very often when we’re thinking in terms of gendered performance or gender performative agency, we’re thinking about how broad social constructions, social meanings, discourses, imagery, etc. shape the way that individual persons and bodies become legible. And I think that work is very important.But what I see less done, but I see operative in your paper, is to say no, actually institutions that are irreducible to just–I mean, of course, it matters that these are men, who are the presidents of the Bundesbank, who have this authority in the European Monetary Union, and of course, their individual performativity matters. And legibility matters.

But it seems like you’re arguing that the very kind of constitution of this vast institution is a gendered performance. Is that fair to say?

Frederic Heine: I think that’s correct, thanks for your thoughts and for your developing the ideas of the paper. What I try to do is to see how the construction of certain institutions and certain cultural political economies as gendered is a process that is in principle contingent. It does use, of course, the larger discourses and cultural meanings ascribed to gender and mobilizes this data is only possible because there are shared understandings of what gender is and how it matters, etc. 

But the idea is that how this is articulated in a specific context is principally contingent. And that there can be variations, be specific institutions that do this more than others. I think you understood exactly what I’m trying to do. Thanks for these thoughts. But to go back to your first question, sorry. 

Scott Ferguson: Let’s get into some of these metaphors. I don’t know if you first want to talk about your archive a little bit more? What you’re studying?

Frederic Heine: I was going to start with the background of why I think metaphors matter in the discourse of these Bundesbankers. To talk about the archive: I looked at a lot of speeches and interviews these Bundesbankers did in the context of of the question: How should an EMU be structured? Should it exist in the first place? And all these issues. In that context, I looked at the public performances and speeches they did. 

And on the one hand, some of that discourse is pretty dry for the average audience member. It might seem surprising that metaphors play a key role here. But despite the technical role these central bankers often have, it is curious that in the German public, there used to be quite well-known, quite important public figures. Jacques Delors, for example, who was a very important figure in the EU negotiations and the President of the European Commission at the time, made the joke that not all Germans believe in God, but all Germans believe in the Bundesbank. So it had quite a big cultural role within the German polity. How is that possible for technocrats? Part of my argument is that this is the case because their discourse is not just technocratic, it’s not just about economics, but it carries a moral message that carries an effective stance.

And this is where the metaphors come in. They help to imbue the speech and discourse with meanings borrowed from other source domains. And metaphor theory has shown that metaphor is an important way in which cognition works. We understand something in terms of something else that we already know, that we are already familiar with. And metaphors can also mobilize affect and motivation, borrow authority and legitimacy from the source domain. In the paper, I argue that the Bundesbankers use a range of metaphors in their discourse on inflation and the necessity of price stability, that they were trying to make sure that the EMU was going along this direction. I examined these metaphors and I argue that the the range of metaphors used weaves together a tapestry that constructs a more or less coherent narrative. But the moral story of why price stability should be so important as to make it the cornerstone of the European Monetary Union.

And one element of this is how inflation is described through the metaphor of temptation. So this is something that seems irresistible. So this is literal, for example, when Karl-Otto Pöhl talks about the always lurking temptation, or related metaphors, such as a pinch of inflation, or the drag of inflation, and so on. The most pointed one is when Helmut Schlesinger, his successor, calls this “the siren calls of inflation,” a metaphor that is then repeated a few times. Or back in the 60s, one of the first Bundesbank presidents called inflation a nymph that doesn’t contend itself with the light flood. So what we have here is a discourse that compares inflation to something that equalizes giving in to desires and in the Greek mythical figures of nymphs and sirens, and this is a sexualized femininity that represents this temptation. 

And you can imagine this temptation to the assumed heterosexual men that are usually the assumed subjects in this language as well. So it plays on this feminization of temptation. And the assumed consequence of these temptations, following the songs of the sirens means shipwreck, flirting with a nymph, in this mythic mythological background means a threat of madness, distraction, taking drugs, addiction, etc. So, these are all consequences of losing self- control. The key to resisting that kind of temptation that inflation supposedly is, is the idea that of self-discipline. 

Self-discipline is regarded as the key not only to not giving in to this temptation, to resist the temptations, to [not] walk the path of least resistance, and all these kinds of metaphors are also implied to represent the remedy against the temptation of inflation. And so, this discipline in relation to EMU–the metaphor is used to stress the importance of discipline on the side of member states, for example. 

Pöhl evokes self-discipline, on the one hand, on the part of member states. Also market discipline is thought necessary to avoid these temptations. Market discipline as a result of investor behavior. And then also external discipline, through institutional mechanisms. And the latter, especially the the mechanism to create discipline, on an institutional side was the focus very much of the Bundesbank, who argued that this external discipline was required because member states couldn’t be trusted with this kind of self discipline, nor could market actors in themselves. 

The idea here is that there needs to be an authority that instills this discipline and that itself needs to be highly disciplined. So, these kinds of binaries between temptation and discipline that are connected to femininity on the temptation side and masculinity on the discipline side, were used by Pöhl to argue for the kind of an EMU focused on instilling discipline. And it did so from the position of the Bundesbank that prided itself in having that function within the German economy and arguing that the German economy has been much better placed to resist that kind of temptation. Because of its “stability culture” that is called in the language of the Bundesbank, and that stability culture itself then, is the result of the past tough choices and tough policies of the Bundesbank. 

So, again, we have here, or I’ll come to that set of metaphors in a second. And basically, I argue that these metaphors of temptation and discipline reference enlightenment, as well as reformist ideas of masculinity, of the composed, rational subject, that never strays from its mission, so to speak, that is always in control. And I also argue that these ideas of masculinity were particularly strong. 

For reasons we might later go into, in Germany, where the idea of the rational will conquering the bodily temptations was a key component of constructions of masculinity vis-à-vis femininity hich was seen as much less able to control the self, the impulses etc., in 19th century discourse, and therefore, needed a male guardian and patriarchal ideology. And at the same time, it was also constructed in an emerging national discourse as something that distinguished Germans. 

And the assumption here is, again, particularly German masculinity, which was often the focus of the national stereotypes as they developed in the 19th century. And also from other nations within Europe, particularly France, and Southern Europe as reference points. And here, this was not only a nationalist discourse, but also related to the idea of race because the idea of rational self controlled masculinity was also very prevalent in European colonial discourse, seen as a key feature that was supposed to distinguish white Europeans from people of color, ultimately, this discourse was one of governance. 

So it justifies and legitimizes governing over others, because one is able to demonstrate the ability to govern over the self. And that is the context in which this self discipline became central in these self representations subjectivities in that context. And so, another set of stereotypically masculine traits that is also used through metaphor in this context is strength, toughness, hardness, they often use to talk about currencies and to talk about basically, relationships to others. So, when choosing, for example, frequently emphasizes that the European currency, the euro, needs to be at least as hard as the D-Mark. 

This is on the one hand, common pylons and currency trading. So hard currency is one that has has a relatively low level of inflation. But it carries the potential metaphorical charge. So the Bundesbank was founded, basically on the mantra of its first president, who repeatedly said with soft measures, you can’t have a hard currency, meaning basically, that you need to be tough and resilient for your currency to be hard as the result of the toughness of the decisions that are being made. 

And the Bundesbankers themselves needed to perform this toughness as well. Schlesinger for example, was asked whether he had turned into a softy when he was perceived as not defending the D-Mark enough, which Schlesinger then sought to strongly deny. And Tietmeyer, who was the third president I look at, described himself as a tough oak, this fabian oak, to instill this idea that he will be unwavering in the face of crisis. And there’s this level of trust and resilience and resistance towards any attempts from outside to influence the decisions that might be present. And so you have, on the one hand, this reference to self discipline, and on the other hand, these references to toughness and hardness as a badge of honor of the economyt hat is masculinized in this discourse. 

For example, maybe I should add this is Schumpeter, for example, described also the idea that basically, the monetary policy of a people demonstrates, shows, as he formulated it, what kind of wood it is made of, which is the literal translation of the German which also expresses this idea that there’s a sort of… it reflects the morale, the toughness of the people that it represents. And this is very much present as the badge of honor in some ways of the national pride of the hard currency. It relies on the fact that it demonstrates this toughness. 

And both references to self discipline and toughness, together, make sense as a discourse of the strict father. This is also what George Lakoff has identified as the metaphorical, a kind of core argument also in US Republican discourse. The idea that the moral authority of a strict father is the desirable cultural trait. The strict father that is, on the one hand, morally strong and constantly and in self control, fighting off the possible internal temptations that he might have. And on the other hand, disciplining the dependents. So children, especially, and also the wife, to some extent, to do the same. And by being also strong and tough enough, to confront external dangerous or external kinds of threats.

The metaphorical tapestry of the Bundesbank invokes this strict father performance both for themselves and as the authority figures and as a cultural moral ideal of the ideal economic behavior. And in that way, there is this charge of the discourse around the D-Mark and the German values of being very hard-working people and tough etc, is reflected in these metaphors. I hope I made myself somewhat clear.

Scott Ferguson: Extremely clear, just for our listeners, something that I think is implicit in what you’re saying, but just to air it out: When you’re discussing the political rhetoric and legal construction of the EMU, you threw in metaphors of temptation versus self- discipline and hardness.

We’re talking about fiscal capacity, and how it should be constituted. And we’re also talking about interest rate policy. And we’re talking about employing and not employing certain kinds of people. So that while we have this intensely gendered institution, that’s a real legal construct. It’s a real social-ideological construct at this macro-political, economic, and even geopolitical level, but that construct is doing real damage through enforced austerity, whether it’s through the… baked into the Maastricht Treaty which founds the EMU. Or its individual decisions in relationship to crises, such that this metaphorical language and talking about being self-disciplined and not being tempted is about not being tempted to provision jobs that might be needed for an immigrant community.

This is dangerous, not just because the discourse itself, the metaphoric city itself, is so colonial and patriarchal and exclusionary as a cultural imaginary, but it itself is justifying all of this institution-building and policy work that is systemically violent in its ways. I just wanted to spell all that.

Frederic Heine: Thank you. That’s very important. As you say, completely implicit, or… and what I said, but an important consequence, … it’s also related directly to the discourse that makes it seem as if inflation was a result of indulgence and of overly luxurious consumption practices–basically, of living beyond one’s means and all these other kinds of narratives that belong there as well. 

And not about abilities to have a welfare state that that is able to take care of people in need and to create jobs and to have an economy that works for everyone and all these possibilities that could be created by an environment in which monetary policy could be used in a way to support policy goals, rather than as a result of this approach of the Bundesbank being in the hands of unelected set of people, mostly men, that make the decisions about the bounds around which the economy and economic policy basically has to orient itself.

Maxximilian Seijo: In your essay and in this discussion, you focused a lot on the German specificity of the EMU’s hard money, metaphorical and damaging discourse and policy as well. And I wanted to maybe hover a little bit on some of these threads that I think I’m sensing in your answers here. 

At the end of one of your answers, you implied Max Weber’s idea of the Protestant work ethic or perhaps that there’s something specifically German, even embedded in German history, in the language about this hard money, patriarchal discursive and cultural approach to monetary and fiscal policy. Can you talk about this history? I mean, I think of Protestantism, a word you just use a second ago was “indulgence,” which I think also links up to that history in its own way. There’s something there. I think that I want to hear you dive into a bit more.

Frederic Heine: Thank you. I definitely think there is a of specificity in German history on that. However, I haven’t looked at it comparatively. But as you say there’s specifics to German culture that one can trace this discourse back to and I have done that a little bit in the context of my PhD thesis, which maybe I can also later talk about a little bit. But for me, there might also be a larger picture that I’m missing. The two key processes that I have identified as maybe one of the reasons why this is prevalent in German monetary policy discourse, in particular, is on the one hand, the polarization of discipline in Prussian culture. 

And that’s partly because of Prussian state formation. Gorsky has this argument that in the Prussian state formation, under the first kings that was central to the Prussian state formation and the reform reforms that created the bureaucratic and military structures of that state, very much informed by Calvinism. The Protestant Ethic that you just mentioned, was very important in the top-down formation of the state, and particularly through military discipline. The Prussian state was very much an innovator in that respect. And stereotypically the German, the Prussian military, was known for its extreme level of core discipline.

That was reflected in the Prussian culture as well, where the military had a particular hegemonic quality, representing masculinity in that period. So I think that’s one reason for the historical trajectory for that kind of discourse. And then why, what does that have to do with central banking, monetary policy? This is where I believe the Weimar Republic comes in. The experience of hyperinflation in the Weimar Republic, after the First World War in the period between 1918 and 1923, there was a period of hyperinflation in Germany. At the end of it, people had to carry bucket loads of cash to buy basic necessities because it devalued so rapidly after the First World War. So on the one hand, there’s a scare about inflation there. 

That is often referenced as well, as one of the reasons for a general culture of stability, the hardest core. But then again, you could have similar experience of national trauma in relation to hyper deflation in some ways, if we look at the consequences of the world economic crisis of the 1930s and of mass unemployment that happened in Germany at that time, that was certainly had arguably a lot more economic social consequences than hyperinflation period. But in any case, so, I also looked at that period and the cultural discourses around that period, around hyperinflation and partly building on Ben Videx’ work in relation to that. 

And what we have seen just now in relation to the references to metaphors, about temptation, discipline, etc., are … how to say this? Basically, I kind of tame in relation to the metaphors that were used at that time because one of the sort of key metaphors there was of inflation as a vicious Sabbath, the figure of the witch was basically mobilized in relation to the experience of hyperinflation. And so that’s another sort of deviant femininity that is kind of seen as being involved in this process and this experience of inflation. And that’s very interesting, right? Because that goes back to misogynistic representations of femininity, as they were abound in the period of the witch hunts in Europe, which were particularly savage also by the way in German speaking regions. 

In that context, witches stood for those aspects of deviant femininity that are seen as threatening to the patriarchal order as Silvia Federici, for example, has argued, famously argued, and witches were seen as kind of those aspects of femininity. Mentally weak, being insatiable, insatiably lusty, insubordinate, incapable of self-control, etc. So the witch embodied all these things that threaten patriarchal social order. And this mobilization of this metaphor, I argue, has to do with the time period in which this happened, because after the First World War, Germany has lost the kind of military ideal of masculinity, has lost a lot of legitimacy in that context. 

And on the other hand, there was renewed a progress for women in the Weimar Republic, who had during the war taken on a lot of jobs in the economy that had been reserved for men previous to the war, and were still employed in that area. So there was a lot more female employment. There were also a lot more political rights in the Weimar Republic, they were granted the, I mean, the world suffrage, universal suffrage was introduced in the 1980s, as well. 

So I think it also reflects in some ways that there’s anxiety not only about the loss of monetary stability and monetary order, but also the anxiety about patriarchal order, expresses itself in some ways in those metaphors of witches that can contribute to inflation. And on the other hand, just to finish on that, then, when inflation was ended by the introduction of a new currency, and the appointment of a new central banker, named Hjalmar Schacht, the kind of patriarchal military masculinity that he represented in that context was again celebrated as he was called a magician who was able to rein in these demonic forces of the inflation, and in that context, also had a specific ways of retooling certain decisions, fiscal budget decisions, and started that discourse of “we have to limit the fiscal resources of the state” etc. 

So I think, in that context, the attention to monetary policy and what it means culturally and this association with ideas of masculinity on the one hand in order to bring under control some aspects that were ascribed to femininity is something that also dates back to that historical base.

Scott Ferguson: I’m fascinated by all the tensions and the contradictions that I think are teeming beneath all of these metaphors. So certainly from the point of view of Modern Monetary Theory, hard money policy, let alone hard money metaphors, tend to be destabilizing because they induce crisis, and they have a crisis response to crisis. 

So it’s ironic, it’s contradictory. It’s hypocritical in addition to being violent and unjust, that it’s the very construction of hard money as an institution and as a metaphoric that is actually a massively destabilizing element in its own right. And then there’s so many other things I want to ask you about, for example, have you thought much about the figure the “schwarze Null,” “the black zero” that is so prized in in German banking? I think it’s fallen out of favor in more recent years. But, you see these these helicopter view shots of all these bankers celebrating a balanced budget. With this aestheticized giant zero, like a plastic sculpture that they treat as a kind of fetish object. I don’t know if how much you’ve thought about that.

Frederic Heine: Totally. I also talk about the years on the crisis period itself in my thesis, and there’s a lot of… the shots celebrated when Schäuble was stepping back from the Finance Ministry positions. You have actually the Prussian references that I was kind of making, you have the Bild Newspaper, which is the biggest German tabloid. And at a certain point before Mario Draghi was doing the “Whatever it Takes” speech that was a turning point in the European Crisis Governance. When he was appointed, they depicted him with a Prussian spiked helmet, which is this military thing, kind of declaring him an honorable German, that was adhering to the monetary ideals of of Germany and later also, during an interview, presented him with the precious spiked helmet–an original one–from some time in order to remind him of the Prussian virtues that he was supposed to inhabit. So there’s a lot of fetishism is I think the right word to kind of describe this. 

Obviously, the Bild newspaper is not the Bundesbank itself, but actually you even have at one point and this is shortly after the announcement of the of the “Whatever it Takes” speech. You have the then-president of the Bundesbank, Jens Weidmann kind of deliver a speech in which a press release which is about the treatment of monetary policy in Goethe’s work, Faust. And where basically he cites Mephistopheles, or the devil, in relation to un-backed paper money, and kind of I don’t have the exact quotation but something else you know, if the devil says you know, if you have un-backed paper money, you don’t have to worry about gold or silver or anything like that you can just indulge in lovemaking and wine drinking and everything and that of your problems will be solved essentially.

Maxximilian Seijo: Well, just to add on that point–Goethe, in his life, and feel free to add to this, is responding to this feeling of expropriation and in his era in the context of the French Revolution, and later on, and these particular monetary allegory and Faust as, as you say, is dealing with in that same model of trauma and then looking and searching for that hard ground and allegorizing all of the externalization that that that go on whether it’s in the figure of the witch or later on, or the vampire or…

Of course, during World War Two and precursors with the Nazis, the figure of the Jews. But I find your exploration of this really, really exciting and fascinating, I think precisely because that history that you’re bringing up all the different strands is so rich with all of this detail and all of these metaphorical tensions and problems that you’re playing out.

Frederic Heine: Thank you very much. And you probably know more about Goethe and Faust than I do. And I realized recently that probably I should do some more studying of that, because it also combines the sort of thinking about inflation on the one hand and a very present kind of work that prominently places the witch as a cultural figure in German discourse, might also be related to why that was so present in the Weimar Republic as a metaphor. Just to say that, maybe I should go into that a little bit more.

William Saas: A little bit more out of left field, but I was intrigued–Was it Schäuble who got the spiked Prussian hat? The pickelhaube? 

Frederic Heine: It was Mario Draghi.

William Saas: Mario Draghi. Okay, I was just very curious, because one of the things that I think another thing that’s been implicit in our conversation and maybe it’s worth talking about or not is the sort of phallic character of a lot of these metaphors. And that that helmet, of course, is quite… I got I got interested in the relative height of the spikes on top of those helmets, and a very reliable source here, maybe you can correct me if I’m wrong, but it looks like: “an AKO of May 1899, would set the height at 9.5 centimeters for officer spikes and 8.5 centimeters for all other ranks.” 

Lots to talk about here, I suppose. I wanted to also circle back to talking about hard money, hard leaders. And kind of the theory of history at play here. It’s very tragic and romantic and zero sum where you have these hard leaders managing hard money systems in order to kind of defend but also fend off vulnerability and femininity. And I wonder if, as we’re having these conversations and talking about the EMU and your published work, if it’s hard not to in the States, look at our situation, and try to trace out and track the perhaps, German lineage of much of the same kind of rhetoric and discourse over here around inflation, especially today. 

And so for example, we talk one of one of our most recent episodes with Brett Scott, and we got into all sorts of money metaphors, and we sort of brought up the metaphor of Paul Volcker, at the end of the 70s, breaking the back of inflation, which is an interesting also that kind of displacement of or characterization of inflation in this case, thinking of them as kind of like a mortal enemy that you want slain, maybe not so feminine. 

But in any case, Volker, probably not who you would think of as this sort of heroic figure of history being cast in this heroic role. All of that, by way is saying, have you done much thinking about the way that these metaphors and systems of metaphors have ramified and played out in international finance discourse?

Frederic Heine: I think… Well, that’s very interesting observations. The short answer to this question is not very much. But Melinda Cooper, for example, has looked at the inflation period, like the 70s, sort of high levels of inflation in the US and kind of traced is somewhat similar discourses kind of in social conservative thinkers that kind of also have seen this as a sign of moral weakness and moral kind of lack of morals in the American population. 

I can’t recall any particular metaphors at this moment, but certainly I think there’s a lot of circulation of this kind of thinking I mean, Schumpeter as well was widely regarded economists that kind of also contributed to the circulation certainly have these ideas. I would have to speculate maybe to answer.

William Saas: This is following my Germanist colleagues. Maybe y’all can help me figure out… are there… can we track any? Are you seeing direct connections, as you’re asking these questions between these sort of inherent or essential Germanness of many of these metaphors, and the way that these are also found, I think commonly in other and especially US contexts.

Scott Ferguson: I guess Max’s questions about Protestantism, reformed Christianity’s role in and beyond pressure is maybe one avenue. One thing I’ll say is that the metaphor of whipping comes up everywhere. The Ford Administration had a campaign called “Whip Inflation Now”, and that’s in Frederic’s article, there’s whipping all the time in EMU discourse.

Maxximilian Seijo: One thing I’d add, when I was studying economics, it was very common for people to ask you, “are you a hawk or are you a dove?”  And there’s something complicated there, too, with regards to I think metaphors. Hawk is the predator. And the dove is in a sense, well, as an image in religion and theology is important. But but also is not a predator, we just say, so that’s maybe another avenue in the US context to… where this kind of exploration would be fruitful.

Frederic Heine: That kind of hawk was the stuff kind of metaphors have also been also used in the European discourse around central banking and during the Eurozone Crisis, there was also this kind of talk about Mars and Venus relating to an IR-type approach, which kind of position the US as Mars, so the masculine kind of foreign policy, and Europe as the Venus which was kind of trying to have influence through soft powers, as it’s also called. And that was kind of referenced in the German press in relation to monetary policy being like, “Yeah, but in monetary policy, we are Mars and the USA is Venus.”

Scott Ferguson: Maybe we can situate this article in your dissertation. So it’s our understanding that this article is one of the fruits of your dissertation that I would presume you’re turning into a book, although I don’t want to speak for you. What’s the broader project of the dissertation and perhaps a future book?

Frederic Heine: Basically, this is correct. Yes. It’s based on one chapter of my thesis. And in that thesis, I kind of look, I mean, the focus of the thesis is the governance of the Eurozone Crisis. And I asked similarly to what I do in the article we just were just talking about, I asked what role cultural gender politics play in the governance, discourses of the crisis. And the rationale to do this was because there was a lot of research about how the crisis and austerity had gendered impacts on social reproduction on public sector employment, on gender equality policy, in that regard, but not so much research to understand maybe gender, if gender can also be seen as integral to the governance of the crisis. 

And so I ended up looking at these metaphors and this cultural kind of politics. And I also ended up taking a historical approach, right discussing these things we’ve just been talking about both in relation to Weimar Republic and then the period of the making of the European Monetary Union. And so the broader argument and the thesis maybe is that masculinist performative agency, as discussed, for example, today has been constitutive for the crisis by asserting a valorization of disciplinary masculinity in the governance of the European Monetary Union.

But secondly, that also that cultural gender politics have shaped and contested crisis governance in a contingent way as well. And that there were sort of variations in the kinds of performative agency that was the general performance of agency that was employed. We’ve already talked about some aspects in which they have been reinforced right in certain levels in relation to how central banking views of the ECB have been represented–the Prussian spiked helmet for Mario Draghi, etc. But also, there have been variations, for example, when Angela Merkel, advanced as a figurehead of austerity with the image of the stabian housewife. 

So kind of mobilizing more an image of domestic femininity as as a sort of virtuous kind of role to apply to austerity. And that sense, in a similar move to some of the discourses around, post financial crisis, would the crisis have happened, if it would have been Lehman Sisters, rather than Lehman Brothers? And this kind of valuing valorization of certain kinds of femininity in this context, as a result maybe of a portrayal of certain masculinities as well. 

And I also look at how anti-austerity discourse, for example, that masculinity is also mobilized with some exclusionary effects, partly in anti-austerity mobilizing. I look at the context of Spain, where at first there was this kind of sense that feminism doesn’t really have a place in this kind of anti-austerity movement. But then, at the same time, that was very strongly contested by feminist activists and kind of formulating centrality of social reproduction as well as the topic of contrasting austerity. I look at those politics as well in my thesis.

And so overall, the argument basically, is that gender representation still matter very much in legitimation of that economic governance, but how they do so is principally subject to specific circumstances, but also to agency in some level. And to answer the the other question that you have, I am working on a book of manuscripts on the basis of this, but I haven’t sort of formalized the book contract yet. So it might be a while until it sees the light of the day.

Scott Ferguson: We wish you luck. I want to follow up with one comment, before we move on to our last big question, which is yet another dimension of what you’re up to a bit we really appreciate that really jives with our project is that while on the one hand, it is important to have a critique and a refusal of austerity is as natural or given or necessary. And zero some trade offs and other kinds of exclusionary punishing systems. 

But it’s not enough to have a positive political or economic language of anti-austerity, because because the world is more than just narrow, political and economic language, all kinds of other language, all of language and culture is involved. So what I think what we’re often trying to do and you’re doing spectacularly on your own journey here is teasing out and shining a critical light on languages that remain austere, that remain exclusionary, that may remain deeply problematic, even as you suggested in the midst of overtly anti-economic austerity campaigns.

Frederic Heine: I like very much what you’re saying here, and it’s important to remain also self critical, and not to kind of assume a sort of coherent understanding of the economy and sort of a coherent system of contrasting power structures within the economy with reference to one’s own class position, for example, without also reflecting intersectionality on the one hand, on sort of the different impacts that crises have on different subject positions. 

An important paper, also on the subject of the Eurozone Crisis, by Bassel and Emejulu made the argument: whose crisis? If we talk about economic crisis, it might be experienced as big crisis in particular by maybe privileged subjects who are immediately losing out, but then for very sort of marginalized people it might not even sort of register as much because they’re concerned a lot more with for example, refugee status within a country. And obviously, crisis still affects them in the long run, but it also… so it’s important to reflect on the way… on the intersectional ways in which economic social policies matter. 

And also often in anti-austerity movements and discourses there’s a tendency of men participating in these movements of assuming this grand analysis and grand strategy approaches that have it all figured out and have this sense of authoritative knowledge that doesn’t need to concern itself with the details maybe or the internal processes. What’s happening within one’s own movement. And that’s also one place where then hierarchies reestablish themselves within contrasting austerity and those those hierarchical relationships. It’s important to be reflective of these things.

William Saas: Absolutely. Frederic Heine, it’s been wonderful having you, but before we let you go, we’d like to take some time and chat with you about another essay you’ve recently co authored and published with James Brassett titled “Men behaving badly”? Representations of Masculinity in Post-Global Financial Crisis Cinema, published in the International Feminist Journal of Politics in 2021. 

Essentially, the essay analyzes complex and shifting gendered depictions of finance and films released after the Great Financial Crisis, such as Inside Job, Margin Call, The Wolf of Wall Street, and The Big Short. Can you, as we’re on our way out the door, give us a window or glimpse into how you and your co author read the role of gender in these post-GFC films?

Frederic Heine: Thanks for asking this question. Basically in those films about finance, we look at how they represent masculinities and how this changes in some ways over time, so more often than not films about finance do center quite strongly on the male protagonists. Even in more recent films on finance, despite maybe the rhetoric of Lehman Sisters that kind of emphasize a bit more the increasing role of women in finance as well. Anyway, so, we try to understand how these representations of masculinity is what functions they serve in those firms. And often in these films, there is a kind of analogy basically between a critique of finance and a critique of masculinity or a critique of excessive masculinity. 

So, the predatory excessive masculinity if, for example, take the film Wall Street and the iconic figure of Gordon Gekko it portrays financial excess in terms of a toxic financial system and in some ways, that is seen as toxic to the real economy or to the heteronormative family, or the fabric of society. Kind of understood in the context of embedded liberalism. And this toxicity of finance in this respect is represented through hyper masculinity. So, masculinity is of, for example, Gordon Gekko, that are seen as extremely dominant, as greedy, as extremely sexually active, promiscuous, predatory. 

And in that kind of sense of embody in some ways, this disembeddedness of finance being represented as toxic through toxic masculinity basically. And that happens also in the post financial crisis films to some extent, the most extremely this is the case in The Wolf of Wall Street, which is a film about excess anti-gravity from the beginning to end basically. But it also focuses quite clearly on the realm of the legal because it’s actual financial fraud that is described in the film. 

And so, in some ways focuses more on the behavior of the bad apples rather than systemic issues. And it’s also partly coupled with class distinction. So, in the film, it’s about working class guys basically turning to investment banking, and sort of adopting some elements of working class culture within that process, and then you have a representation of brazen risk taking, overt sexualization, etcetera, in in these processes. As a shift cipher for something going wrong in finance, but in The Wolf of Wall Street, through the distancing through humor, and through the distancing through class and through sort of focusing on a particular case of clearly illegal sort of practices. It’s not necessarily as sort of indicting as the Wall Street film. 

But then, in the films, Margin Call and The Big Short, you also have elements of this brazen risk taking, overt sexualization, partying, as metaphors for the excesses of finance. But you have a redemption of certain masculinities in those films. And with them off finance, too, as we argue, so that’s on the one hand, the geeky masculinity that doesn’t understand social clues and therefore doesn’t get caught up in the irrational exuberance that is portrayed by the sort of culture of excessive partying, etc. 

And so this idea of this hyper rational, geeky masculinity that’s not subject to these temptations, if you want to connect this also to some of the stuff that we’ve been talking about before. And these masculinities don’t get distracted and they look at the real data and therefore aren’t taking part in the herd behavior, as Keynes would have said, for example. And then turn out to be the real men and the heroes of the films like Michael Burry in The Big Short, or Peter Sullivan in Margin Call. And on the other hand, there’s a level of emotional learning as portrayed in the films particularly in The Big Short that sort of good apples and that behave that sort of have a moral compass still intact that learn from past mistakes from past or working like Baum in The Big Short. 

And so, we kind of see this sort of redemption of some aspects of masculinity as a way in which the potential of both finance and masculinity is kind of seen as to kind of remain with maybe unfortunate toxic masculinity referenced earlier. But sort of the kind of redeeming that and sort of kind of portraying a masculinity that has come under some level of criticism within the sort of kind of discourse of excessive predatory masculinity in the context of financial crisis, the excessive risk taking, etc.

And kind of redeeming a figure of reinstating rationality of the market and of finance, through references to on the one hand geekiness and rationality and that aspect. And on the other hand, of sort of emotional learning of appropriating, if you will, some aspects of femininity of kind of off yet constitute femininity of being emotionally more aware of oneself into sort of a discourse of resilient finances. Basically, what we come out with at the end of these movies.

Maxximilian Seijo: Well, Frederic Heine, it’s been a real pleasure having you on Money on the Left, we hope at some point, maybe to have you back soon.

Frederic Heine: Thank you very much. It was a great pleasure. And thank you so much for these great questions and spin offs. It was a very good and pleasurable experience. Thank you very much.

Brett Scott joins Money on the Left to discuss his recently published book Cloudmoney: Cash, Cards, Crypto, and the War for our Wallets (Harper-Collins 2022). A committed advocate for financial heterodoxy, Scott grounds his perspicuous critique of “cloudmoney”–the conjoined efforts and outcomes of Big Finance and Big Tech’s drive to go “cashless”– in his anthropological training and work as financial derivatives trader in the midst of the 2008 financial crisis.

Through our conversation we explore the possibilities and limitations of different metaphoric frameworks for understanding money, paying special attention to the pitfalls of figuring money as blood-like fluidity. Scott’s own comparison of financial operations with the functioning of the central nervous system prompts further discussion of the temporal and physical realities of modern money. We also discuss how awareness of the principles of monetary design clarifies the need for physical cash and the perils of privatized and surveilled forms of digital money.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

The following was transcribed by Mercedes Ohlen and has been lightly edited for clarity.

William Saas: Brett Scott, welcome to Money on the Left.

Brett Scott: Good to be here. Thanks for having me on.

William Saas: It’s wonderful to have you. It’s been a long time coming. Last time we saw you was at the first international MMT conference at UMKC in 2017. And before that you worked in finance and had been writing about money and crypto for a while. Could you share a bit about how you ended up at that MMT conference and maybe catch us up on what you’ve been up to since then? 

Brett Scott: Sure thing. It’s actually quite a funny story about how I ended up at the conference. I was invited to another conference in Delft in the Netherlands. It was called Reinventing Money. And it was run by these… I want to say quite libertarian Dutch monetary reformers. And I don’t know how much time you guys have spent in the Netherlands scene, but there’s actually quite a long tradition of this quite conservative monetary reform people there. And I think the Netherlands in general has this vibe, which is… it’s one of the first capitalist trading nations. So it has this long tradition of liberal economic thinkers. 

And anyway, I ended up at this conference, one of these Dutch managed monetary reform people, some of whom were quite right-wing. Quite like “gold bug” types. And I ended up on this stage and I was super jet lagged. I had very low blood sugar, partly because I’d actually been blocked from buying a Coca-Cola from this cashless vending machine that refused to take my card. So I decided to start talking about this on stage. But how this machine had stopped me from engaging in a market transaction. And so I kind of ranted on the stage. And right in the front row was Stephanie Kelton, who had also been invited to this since the first time, I guess, she had seen me and then we spoke over dinner. And then she said, “hey, come to this event that we’re doing”. And that’s how I ended up at the MMT conference. It was great. That’s a really cool event.

William Saas: So how’d you end up in the Netherlands at that conference, talking to the “gold bugs” and sharing your market grievances?

Brett Scott: Yeah, so actually in monetary reform circles, there’s a bunch of different traditions, as I’m sure you guys have come across. A lot of the anti-fractional reserve banking, sometimes an anti-credit creation of money people like that sort of one tradition and monetary reform. And so I think that’s quite a sort of strong tradition in the Netherlands. There’s groups like ons geld, which campaign against banks being able to create money. And so I think that Netherlands scene I was… I had new people in that scene, and also new people in the crypto scene. So there’s also this kind of crossover between the anti-bank creation of money, people with this sort of crypto currency, Bitcoin people. 

So yeah, the guys who got me there are kind of in the middle of that world. And actually, the guys who arranged the conference had tried to start the first full reserve bank in the Netherlands. And we’ve kind of, I think it failed, it hadn’t managed to get a banking license, but there was quite an interesting effort. They were trying to create this fully backed bank. They also made a board game about the evils of bank creation of money. So it’s quite an interesting scene. And actually, I remember actually once going into the MMT conference, and some of those anti-fractional reserve people turned up at the MMT conference as well. And so there’s an interesting political dynamic between the MMT movement and the sort of… what would you call those? What do you call those guys? Like the sort of…

Scott Ferguson: Positive Money?

William Saas: Positive Money? 

Scott Ferguson: Yeah, although they’ve… certain Positive Money groups have really changed, I think in relationship to the MMT movement. 

Brett Scott: Yeah.

Scott Ferguson: So I don’t want to blanket call them all the….

Brett Scott: You know, I knew Ben Dyson, who started Positive Money in the UK. [He] sort of then moved away from it and actually became a central bank digital currency researcher at the Bank of England. But, Positive Money has always had this kind of interesting dynamic in the UK where it actually was trying to position itself as a left-wing monetary reform group, but would often attract these people from the sort of political right. You had these conspiracy theories about the banking sector. And I know Fran, who is still the director of Positive Money has always had this trying to sort of distance herself or distance the organization from the more right-wing elements that often crowd around monetary reform.

 But, that’s what partly what makes monetary reform quite an interesting area politically is it actually does attract these different ideological groups who sense that there’s something in the monetary system that needs to be addressed. Yeah, I guess I kind of span between these. But I’ve noticed over the years, there’s been more sort of Positive Money type of community getting into MMT is getting more on board with it.

Scott Ferguson: Yeah, that we’ve definitely noticed that as well. So we brought you here today, we invited you here to speak with us about your new book, which is titled Cloud Money: Cash Cards, Crypto, and the War for our Wallets, which is just out last month with Harper Collins. But before this book came out, you published a regular newsletter that was called Altered States of Monetary Consciousness. And you, even before that, were blogging about finance. And I guess, just to kind of frame our conversation, we’re wondering if you could talk to us about, really, how did you come to be thinking about money and publishing about money and advocating in these various kinds of circles? And how has your approach or your rhetorical strategies changed over time?

Brett Scott: Sure, there’s a lot I could say there, actually. The kind of broad brushstrokes of my trajectory, as it was, I have a background in Anthropology and History. But also quite left-wing politics. And I decided to do this experiment. Well, let’s say adventure. I like to call it an adventure, where the side I’ll go into the financial sector and sort of explore it. Or perhaps embody it. I like to experience things with my… to feel the emotions of things. And so I went, in the midst of the financial crisis, I went and worked in this derivatives brokerage. And so for a while, I was actually involved in high finance and over the counter swap contracts. So basically exotic derivatives in the midst of the financial crisis. But coming from this left-wing political background, and that made… it was quite an interesting experience, learned a lot of stuff about the high finance world. 

But also realized how little people knew about the monetary system in high finance, often because you don’t actually need to know anything about the monetary system, often when you’re working in very specialized finance. And after that experience, I went and I wrote a book for activists, which is called The Heretic’s Guide to Global Finance: Hacking the Future of Money, which is basically a sort of simple guide to finance for people who had some intuitive concerns. And people, for example, got involved in the “Occupy” movements, I was actually asked to write it in the wake of the “Occupy” movements. And you know, that was kind of published by a small left wing press, Pluto Press, a London based publisher. 

And since then, I worked in lots of financial reform campaigns and these other types of financial activism, you might call it, but also got involved in alternative finance, which is thinking about alternative currencies, alternative banking, and so on. But fast forward, you know, into the present day, I also got heavily involved in looking at the intersection between tech and finance, big tech and finance. And my newsletter, which is what you mentioned, Altered States of Mandatory Consciousness, I actually started that amidst the pandemic. 

And it’s still going on, it’s temporarily been paused. Because my book right now, Cloud Money… my new book is taking up lots of my time. But yeah, Altered States of Monetary Consciousness, the basic idea was, I was tired of writing. I’d written for many journalism outlets, or big media publications and so on, but I always find them quite constrained. And what I can say in those publications, they always want some sort of… you have to attach everything to the news, and you have to spin everything in a certain type of way. And what I was actually more interested in was writing for an audience who was more interested in sort of meditating upon the monetary system without having to have it attached to current events.

 And the newsletter basically enables me to do that. And one of the big things I was trying to do in the newsletter is to help people visualize systems that are invisible. Sometimes by literally trying to draw them. And sometimes by using metaphor, because metaphor is seen as a kind of like visual technique, in a way, it’s like you have an invisible system. So, you create a visible metaphor, that person can picture in their mind as a way to sort of help them to grasp this otherwise intangible type of thing. And the monetary system in the financial sector more generally, often very hard to conceptualize, which often is why people feel so alienated. 

And so I’m very highly motivated to do the newsletter precisely because I’m interested in, how can you kind of de-alienate, help people to sort of feel these systems more, picture them more, and then, from that perspective, be able to perhaps do more effective action on them? But if nothing else, just be able to understand their position in the economy better.

William Saas: Subscriber to your newsletter, here. I’ve appreciated it for multiple reasons, but one in a kind of academic and pedagogical sense as somebody who teaches and thinks about rhetoric, it’s, what you’re describing is a project of teaching, through different and adaptive, rhetorical strategies. And I think that that’s part of what has drawn me in and I think lots of others, to the MMT project, which is the insistence on… there’s almost a kind of resistance to metaphor. I mean, it never really works. 

There’s always metaphors running throughout the financial system, and the way that people are thinking about things, but the creation of concepts and systems that are deliberately resistant to popular understanding, esoteric, and so the process of translating that stuff and making it apparent like that bringing before the eyes making visible the structures and systems.

Brett Scott: And metaphors are quite… I find metaphor very fascinating, because it’s also quite dangerous. There’s limitations to metaphors. And what I’m often doing in the newsletters is experimenting to see how certain metaphors work and where they fail as well. And with the monetary system this always becomes an interesting task. So actually, talking about MMT, I did a piece, which was called MMT is a Language of Ants, Not Squirrels. And I was talking about how you got to understand the worldview of a squirrel is like, you’re racing around trying to find acorns. And this is the kind of like, sort of “money user” mentality. The person who experiences money just manifesting in front of them and trying to grab it.

Scott Ferguson: It’s very Lockean. 

Brett Scott: Versus the experience of the actual oak tree or these ants who issue these acorns, and actually want them to spread. And I like this metaphor, to some extent. It kind of shows us the dynamic between users and issuers, but then it has all these other limitations to it. So, in my book, Cloud Money, I’m using a variety of different metaphors, but it’s always like, trying to sequence metaphors together in the right order and not let them clash with each other, is always an interesting artform.

William Saas: But there can be something telling or instructive or constructive about mixing metaphors in a way that you might mix chemicals and see what happens. Some kind of reaction to it. So you mentioned the squirrels and the ants. Is what we find in Cloud Money, sort of representative of your best efforts and successes in this sort of metaphor, experimentation that you’re doing in the newsletter? Or do you feel like you might have hit upon something new that you could share with us now?

Brett Scott: Well, Cloud Money has a very particular agenda. I’m talking about the politics of the states or government cash system versus the commercial bank, digital money systems, and what it’s focused on and the crypto world. It doesn’t necessarily go super deep into some of the more… just more generalized understanding of money, perhaps. So in my newsletter I want to do is these deep dives. And I know you’ve probably seen these nervous system metaphors I use. So, my editors in Cloud Money, I had these whole sections, but I’m just trying to do this huge, like nervous system metaphors for the monetary system. 

And they cut it down quite a lot. Because it’s an I can go into the metaphors but… I think Cloud Money has some great metaphors, but it doesn’t have my entire repertoire. I think I’d like to do another book where I go way, way deeper into some of the kind of different approaches to understanding monetary systems, and particularly this nervous system metaphor I’d like to build upon.

Scott Ferguson: So maybe we can pause here and give you an opportunity to talk about the key contrast of metaphors that you put in the beginning of the book. And that’s the blood metaphor, which is very, very old. You can find that in Hobbes. And then this nervous system metaphor and understanding that no metaphor is perfect, and that you are always experimenting with metaphor. What is that contrast help you argue and help you make visible for the reader of Cloud Money? 

Brett Scott: Sure, yeah. So at a deep level for monetary systems, in general, I’m using this metaphor of money as a nervous system, rather than a circulatory system. So in many typical economics discourse, there’s this idea of the financial system as some kind of circulatory system, money is blood. And actually, when I used to work in finance, you’d actually find many financiers had the self image of the financial sector as a kind of heart of the economy. So it’s like then they’ll say things like, “without us, these industries wouldn’t wouldn’t get funding, they wouldn’t get the lifeblood that they need to live as it were”. So there’s lots of this idea that money itself has some kind of substance of value that sort of pumps around, and I’m not claiming to be some expert on the human circulatory system.

 But you have this idea of these little blood cells that carry nutrients or carry things to tissues and you can have the same sort of metaphoric understanding of money. This idea of money is somehow carrying value to people. This is the very typical sort of what I often call a commodity orientation to money, it’s sort of like the imagination of money as some kind of mystical substance of value that flows around. Which he finds very typical in many… basically, I’d say the mainstream economics is very typical. 

Implicitly, it’s the underlying kind of mental model of monetary systems. Then I think that blood metaphor is deeply flawed, because in my worldview, nothing can actually, I would say… in the MMT worldview, as well, but more generally, in people who understand the concept of money as credit. It’s understood the actual underlying value and an economy, the underlying sort of substance, as it were, resides in human beings and the natural ecosystem. This is what all economies are is human beings applying themselves to the earth, and building things. And that’s where your value it.

 And it’s not like, the unit of money is carrying that around somehow. But what units of the monetary system is often doing is activating people and particularly people who are locked into very large scale into interdependent meshes. And so if you sort of zoom out, the nervous system metaphor is much more accurate in the sense that nervous impulses activate tissues. But if I’ve been rock climbing all day, and my arms are exhausted and I’ve basically just totally pumped out my arms, no amount of me sending impulses to my arms is going to make them work. And this is like quite a useful thing to be thinking about sort of monetary systems. If you’ve just maxed out the actual labor and resources, new economy, no amount of like issuing money is going to sort of make them work. 

But if you haven’t, if you have a bunch of sort of excess capacity or the sort of underlying substance, you actually can. I think nervous system as the metaphor is good. And also particularly for the financial sector, when you start to think about large scale financial institutions, what they often are doing is… I kind of think about them as a sort of motor cortex. So again, I’m not like a neuroscience expert, but very crude terms, the motor cortex is the part of your brain that translates thoughts into action. So I think, “I want to move my arm” and the motor cortex will translate that into action. I think the financial sector can often be thought about that. 

We’re doing large scale financing of big projects, you’re kind of activating 1000s of workers into action. And those workers are what creates the thing, but the financial sector is able to sort of coordinate that action. And this sort of turns the financial narrative on its head to some extent. It’s not like those workers are unable to… the source of value comes from those work. That’s not from the financial sector. But certainly in an interdependent economy where you’re dependent on money, the financial sector has the ability to activate them. That’s basically the metaphor. And I don’t know how well I explained it. But that’s kind of it.

William Saas: I think it’s great. And it calls to mind, there’s a particularly grisly metaphor that’s sort of in the ether right now around inflation. And it recalls the actions of Paul Volcker and the Volcker shock in the early 80s, as breaking the back of inflation. I don’t know how considerate that metaphor is, but they talk about it as thinking, will Jay Powell now break the back of inflation, just like Paul Volcker? But in a way I don’t think it’s thoughtful in the way that you’re thinking, but it lines up nicely with what you’re talking about. What are they talking about in breaking the back of inflation? They’re talking about deactivating all these circuits and modes of action.

Brett Scott: I mean, I think this sort of stuff becomes very important. I haven’t necessarily thought huge amounts about inflation metaphor. But, certainly, for example, one of the things you’ll find in the commodity imagination of money, this is where you’re imagining money is somehow metaphorically carrying stuff with it. A lot of the inflation scare mongering stuff imagines it almost evaporating out of space. You have this idea that it’s almost a gas leaking out into the atmosphere, some other money is disappearing, it’s floating away. So again, it carries the implicit underlying idea that somehow something is inside the money itself that’s escaping. And it’s not thinking about the full sort of circuitry of an actual interdependent network, where all the actual value lies in human beings. 

So this is very partial descriptions of complex systems. And this is often how you do scaremongering or misinformation around what’s going on. I mean, you see this all over and monetary systems, it’s a big, big thing. During another completely different example, during Brexit in the UK, there was all this kind of scaremongering with them saying, “now we’re spending all this money on the EU”. It’s almost like they had this idea that money was sort of evaporating away or floating away, like some substance. And this idea is well, what do you get for that thing? These are complex systems with these multi-directional flows. It’s not like you just find these singular… 

Yeah, I haven’t explained it very well. But I think there’s a huge amount of this very partial sighted descriptions of monetary systems. And often what I’m interested in doing is showing people like the interconnections and interdependent nature of monetary systems.

Scott Ferguson: Yeah, the blood metaphor. There’s a version of blood speak here too that sees money as hemorrhaging. Which is such a misleading way of understanding. Like we hemorrhage money and we hemorrhage jobs and free trade contracts or whatever. I think of Ross Perot you know, on the campaign trail, and these are like you know NAFTA might be a problem, but it’s not because of hemorrhaging. It’s not because of this unstoppable outflow. 

Brett Scott: Another fascinating one and monetary speak is when people talk about money going into things, for example, when people say huge amounts of money are going into the crypto market and…

Scott Ferguson: They’re getting pumped.

Brett Scott: They’re getting pumped into the crypto market and I’m like… So what are you saying? Because this is quite bizarre because you’re basically handing money to somebody else to buy a token from them, but now it’s exiting. So, this is a very strange idea that somehow it gets captured inside something rather than it’s within an interdependent system that’s moving around all the time. So we had this very strange partial vision idea, you know modern economics is full of this kind of bizarre sort of partial vision on monetary systems.

Scott Ferguson: Yeah I really appreciate your reflexive experimental approach to metaphors and money because it is so taken for granted and it’s a constant challenge. I think we find and you know we often need to appeal to physical things and physical perceptible entities that we can that we can understand, but they very often run us in all these problematic directions.

William Saas: We start to forget that they are metaphors. That’s part of the reason why you can tell the success of a metaphor, by how few people actually recognize it as one.

Brett Scott: Yeah. I think those machines are made to sort of show a Keynesianism that’ll be like water wheels, and… have you guys seen those machines that they use?

Scott Furguson: Yes.

Brett Scott: Who’s the guy who designed that? But that’s all water metaphors for money and weirdly, the Bank of England has also used water metaphors which isn’t actually that far from the…

William Saas: Filling the tub. 

Brett Scott: Blood metaphors. And again, it’s a useful… it’s an easy kind of one, but it carries with it the oldest dangerous sort of commodity imagery for me.

Scott Ferguson: Yeah it’s so fascinating just to kind of keep going down this path. You’ll find those metaphors even in MMT as a popular explanatory strategy. I believe it’s this guy who writes into the pen name JD Alt. Who created all these diagrams of these bathtubs being filled up with you know fiscal spending. I think there are deep limits to those metaphors, but it just goes to show that you can tweak liquid metaphors and they can have a different valence. Even if I would say that I don’t really like them, they’re certainly a lot better than mainstream economics or the financial sector.

Brett Scott: ​I’ve also used them. Actually that’s my concern about my MMT article that I did about squirrels and ants was precisely… it was somewhat acorns it was just commodity imagery. So I’m dealing with these things that have an actual inherent sort of… and I know that I say this in the article, this is the limitation of this… can show you the difference between an issuer and the person who is a user of money, but it will give you the wrong… give you a commodity metaphor of money at the same time, so that’s that’s a kind of trade off on that metaphor.

William Saas: When you’re also with the ants too, there’s the whole… the rest of the baggage of the narrative of the story…of the Lord of the Rings and the Hobbit and all that stuff. Okay, so if the ants are… where are they in the cosmos of the Lord of the Rings universe relative to others?

Brett Scott: We should start a mandatory metaphor school or something.

William Saas: I think so! Or at least we have a publishing space on our website, if you want to riff or whatever, but what I like too is that… so talking about breaking it down to there’s a circulatory system which is ultimately a fluid metaphor, that that can be talked about in sort of bathtub terms, as I think JD Alt does, but what we get with the nervous system is another kind of physical system in electricity. And neurons and impulses and things like that, that are coordination at a distance almost simultaneously as possible in a way that the physical water fluid metaphor there’s a slowness to it. One of the things– talking about metaphors– I gotta shout out Scott’s when we’re talking about the central nervous system.

 We were writing about University currency system, and he talked about the Fed as a “choreographer of credit” in one of the things that we wrote together. And it strikes me as like there’s all sorts of modes of performance available if we think about the system as a set, a nervous system there’s clumsy coordination and then there’s fluid coordination, choreography.

Brett Scott: One of the reasons why I call my newsletter Altered States of Monetary Consciousness is that it has multiple meanings. On the one hand, it could just mean helping people think differently about money. But actually, it is sort of deeper meaning when you go into that sort of more nervous system metaphor. I’m actually literally thinking about manifests as a type of planetary level consciousness. An actual sort of… one of the big things many people intuit about, if you have to imagine the economic system as a kind of super organism, that we’re all connected together and an interdependent mass. In a sense we are the body of the economy. And then the sort of monetary systems, are sort of embedded in that as a kind of nervous system. 

And then the financial system, you can almost think about as more a central part of the nervous system is able to activate stuff. And if you think about critiques of the financial sector, often one of the biggest critiques is how sort of numb it is to its body, as it were, if you think about the superorganism concept. During the financial crisis, you’ll find this extreme disconnection between the actions of the financial sector and the reality of what’s happening on the ground. 

So if you sort of think about this metaphor, seriously designed to think about literally, how kind of like disassociated the sort of system is, and then if you think about alternatives, you start with thinking about how do you make the monetary system more responsive to the reality of its actual… the underlying body of the economy as a world terms of resources, and people? Now think, for example, the MMT movement, in listening to the mainstream policy circles, thinks far more about that kind of stuff, saying, “you guys are fixating upon this abstract stuff about how much money there is, or whatever”. But in reality, we should be thinking about what’s the underlying reality of the economy? 

Scott Ferguson: Yeah, and people and employment and suffering and ecological collapse. Yeah. So let’s pivot and really get into the key critical argument that you’re making in Cloud Money. So, you’re positioning your book and yourself against this dominant and largely taken for granted narrative, that’s surprise surprise, coming out of the banking sector. About digital finance, and that we’re moving kind of in this inevitable evolutionary progressive way, from this old bad thing that we call physical cash to this clean, efficient digital payment system? What’s wrong with that narrative? Descriptively, politically, and whatever else you had to say about it, and what are you sort of offering as an alternative or a counterbalance?

Brett Scott: Yeah. So in some ways, what I’m… there’s a few different things I’m trying to do in the book. But, one of the big ones is to cut through the inauthentic narrative about why we’re seeing declines in the cash system around the world. Now, the typical narrative is very much this idea that it’s something that we’ll want, and we’re driving it through our ordinary everyday actions. And it’s also driven from the bottom up. It’s very, very typical, you’ll find this language if you look at a newspaper article, which says something like, “customers move towards digital payments”. There’s all these articles, you’ll see them in the store. Well, they’ll say “banks shutting down ATMs as people move towards digital payments”. 

The agency is always imagined to exist in the sort of small individual. Everyone’s just collectively acting like this and this is why this is happening. And all the big institutions are then following what the everyday person is doing. So the bank is shutting down its ATMs because all of its customers don’t want the ATMs anymore. All right. Now, that’s a very, very typical narrative. Whereas what I’m doing is sort of filling in the other side, the top down part of that story, saying, “actually, if you look at this, what’s been going on, there’s been a huge amount of top down pushes against the cash system”. 

And actually, the move away from cash is frequently far more in the interests of very large tech and finance companies than it is in the interest of everyday people. And if we go back to the more broad points we were making earlier about an economic system being a huge interdependent network of different players. One of the political questions you ask yourself is who has the most power In the economies that we find ourselves in? We’re all dependent upon each other. And we’re also locked in these huge webs with each other. But also, we’re often operating via these sort of huge corporations. And actually, their economic actors as a collective, they often have a lot more power than ordinary people do. 

So if, for example, you got oligopolies or banks and tech companies who are moving in a particular direction, they’re able to actually alter the whole nature of the overarching economic system. What’s called “the War on Cash”, sometimes, about these types of top down actions with these oligopolies of players are all moving against the cash system at the same time, and pulling people along with them. Now, it’s true that there might be some people who willingly go along with that trend or perceive themselves as you know that it’s in their interests. But in the long term, that’s sort of irrelevant.

 What’s most relevant is that these players are going to do it anyway. And their main job is to either initially convince enough people through sort of ideological techniques and marketing techniques. But they don’t need to convince everyone, they just need to convince enough people that they can set in motion the changes that will then force everybody else to make the change. And if you imagine in some sort of hypothetical future state, it wouldn’t… in countries like Sweden right now, where this process has gone far enough ahead, it’s no longer a choice. These companies no longer have to sort of spin stories saying, “oh, people are choosing to do this”, because they know people no longer have a choice.

 So Cloud Money, I’m basically looking at the… cutting through the spin of why these changes happen. And also pointing out that if you zoom out and look at the trajectory of corporate capitalism, what’s happening is, big tech and big finance are fusing together. Increasingly, Amazon, all these players are saying they can’t operate unless they are fusing with transnational digital finance infrastructures. And then the capitalist system, when you try to maximize profit, your overarching sort of impulse is going to be towards increasing scale speed, interconnection, complexity, acceleration. And cash basically is antithetical to that. Cash is a thing that sort of slows stuff down and creates friction. 

So even if individual human beings who are physical and on the ground actually resonate with the cash system, the overarching economic system they find themselves within, those corporate players doesn’t. Alright, so this is why people will often have this the story in their head, that the end of cash is inevitable. And for that matter, the end of anything that’s not automated or not sort of digitized. That’s the sort of the basic overarching thing in the book. And then I’m also looking at then how the cryptocurrency movements perceive themselves in relation to that growing tech finance vortex. That’s the broad brushstrokes.

Scott Ferguson: Can we dig a little bit deeper into what we might say is your defensive cash? Why cash? Why cash at all? What do people resonate with when we are talking about physical cash? Why is the narrative, the mainstream corporate narrative that is destined to be outmoded. Why is that so problematic?

Brett Scott: Sure bear in mind, cash is still the most widely used one payment in the world. Yet the narrative in the sort of public domain imagines that it’s some kind of thing that’s just obviously destined to disappear. So in terms of actual everyday usage around large parts of the world remains the biggest form of payments, but definitely the ideological tide is against it. And so that’s just one sort of meta point to make. But in terms of it’s the appeal of cash, I’m not saying people have some sort of self conscious love of the cash system, often these are unconscious types of systems. 

But either way, I will describe the cash system as a public utility, or I can describe it as the kind of the public bicycle system of payments. It’s got this public utility aspect to it. It doesn’t require any type of interaction with large formalized institutions. It just works, has immediate finality. A lot of people when they are asked on the Central Bank’s surveys about why cash, there’s a kind of hierarchy of reasons why they prefer cash. One of the immediate ones is that you know the transactions done. So this concept of finality, this immediacy to the transaction. Another big one is budgeting purposes. So there’s a very, very big correlation between the use of cash and income levels. So, and there’s lots of interesting studies about this. 

But cash basically slows down spending. And for people who are already on low incomes, this is important. So it’s in terms of… many people will cite it as an important budgeting tool. They know how much they have, they’re not getting into debt. And actually, one of the things that visa will actively market to businesses is that people will spend more with digital money, so they can spend up to 25% more actually, often. So in terms of going to that point about acceleration in economic systems, you spend more digital money systems on digital systems in general. So in terms of the overarching capitalism possible, more profit accumulation, digital systems were just far more ideologically aligned. 

But there’s also a lot of… there are some people, like libertarians, who like the privacy aspect of cash, right. So this idea that you don’t need to watch what I’m doing. But as you know, many people like that. I’m in Germany right now, and Germany has a big historical tradition of valuing privacy. Especially in the context of the Stasi, lacks surveillance by states and sort of valuing financial privacy. So that’s one aspect, but also distrust of institutions. You’ll find very high cash usage in places where institutions are distrusted. So by contrast, in places where institutions are very highly trusted, you will find quite high digital payments. 

So for example, in Sweden and Norway and places where basically everyone finds it massively surprising that you might distrust the banking sector or the state, this is where they sort of find it feel that it’s somehow obvious that you should want to transition and have been absorbed into large institutions. And you’ll see this in the States probably politically, I haven’t done any sort of detailed ethnographic research. But if I was guessing, I’m going to say, kind of like your urban yuppies are going to find digital payment systems, un-problematic because they’re sort of steeped in this institutional mentality. 

You get easy access to credit, you’re basically viewed as a high status member of society. Whereas if you’re not in that demographic, you’re probably much more likely to use cash. And I’m imagining this goes from like your libertarian rancher doing farming through to your kind of ethnic minorities who don’t trust the banking sector who don’t feel that Bank of America represents them. So there’s lots of…

Scott Ferguson: Or they can’t afford the fee. 

Brett Scott: Yeah, there’s also a bunch of these sort of more immediately practical things like the fact that some people can’t get these accounts or actually, they will get them on detrimental terms. But I think that’s fairly well known in some ways. But so in some ways, I push this idea about the sort of cultural dimensions more because it’s less thought about. In much of the debate around cash, you’ll find this idea that, at least in the mainstream, that if only people could get access to the digital systems, they would obviously want to transition to that. But they face barriers, and that’s the only reason why they don’t. Whereas I feel it’s important to push out this idea that actually within many parts of society, there’s an inherent distrust of formal banking institutions and so on. 

And this is actually one of the things that’s going on underneath the surface if you think about gentrification. This is one of the things you immediately noticed with gentrification is gentrified places automatically are the ones that are most prone to being quote unquote “cashless”. AKA being dependent upon using very large corporations for their payments. So yeah, there’s lots of the sort of cultural dimension. I could go into this further, but you know there’s… does that resonate? Does that make sense?

William Saas: Totally. 

Scott Ferguson: Yeah. Resonates.

William Saas: Yeah. And in what you’re describing with the certification, sounds like it’s probably very similar in most countries.

Brett Scott: I was on NPR Wisconsin a few days ago and it was quite interesting taking calls from listeners who called in and they said a lot of the stuff. The idea that the tangibility is important to me, the budgeting. Also fears about the system going down in length. This is one thing that’s seen in the States is quite important for weather events. This is you know, this is kind of the sort of black swan events. But a lot of people intuitively have this realization that offline forms of money are more resilient. And this is why this metaphor, which is a different metaphor now because the cash is the public bicycle system of payments, actually is very effective. 

Because often what people are told when they’re being shamed for using cash is they’re told you’re using the horsecart of payments, you’re using this old stupid form, what’s wrong with it? Where as soon as you switch to this bicycle metaphor, suddenly it’s like, oh, this makes sense. Actually, bicycles are actually a pretty advanced form of transport, even though they’re technologically simpler than, say, the Uber system. And digital payments are very much like the Uber of payments. And I think this is like a great way to get people to think about this. There’s reasons why we value simple system operators because they just work.

William Saas: Do they have public bicycle systems in Wisconsin? I don’t think we have any down here in Louisiana.

Brett Scott: I don’t know. I mean.

William Saas: Sounds great.

Scott Ferguson: We have lots of privatized bikes…

William Saas: Yes, you can rent them. But you have to use a card usually.

Brett Scott:  Yeah. But also what’s interesting about the cash system for me is politically, it actually appeals to a whole bunch of different players. So if you zoom out and look at the current state of global capitalism, there’s actually a sort of weirdly anti-capitalist element to the cash system. And what I mean by that is in an earlier phase of capitalist systems, cash would have been at the leading edge. It would have been the thing being used to expand market systems.

Scott Ferguson: This is why Marxists say they formulate their critique in terms of the Cash Nexus. The cash Nexus is like the cradle of evil.

Brett Scott: Imagine an early pre-capitalist society, and then there’s some kind of sovereigns trying to sort of move in. One of the first frontiers is going to be the issuance of these units of cash. That slowly infiltrate the communities and break down their local networks and integrate them into a larger economy. So it’s one point in time relation, yeah, the cash system would have been this on the frontiers of capitalism. But in the current phase, it’s this thing that slows it down. So in a weird way, it’s become this break upon the system. And in this context, it has a sort of anti-capitalist element, especially because it actually enables all the many sort of marginalized people in the system to participate without getting watched by the main institutions of capitalism.

 So this is what’s called the black economy or whatever, the sort of the margins of the economy. So that’s one. So it has this kind of anti-capitalist part to it, but also from a centrist perspective, you speak to these various sort of like policy wonk types, they realize that the stability of the monetary system kind of depends upon people having access to government money. So this is a very center political argument. And then also on the right, you’ll find all this sort of nationalist type stuff, where it’s like, I want my national money, and I don’t want to, screw the banks, and give me the actual dollar and so on. And it’s quite fascinating from a political spectrum perspective, seeing who resonates.

William Saas: One of the things that I like, and I think it might be the final paragraph or so of your book, you sort of insist on and defend and advocate for cash precisely because it is dirty and inefficient. And you want to maintain the right to that sort of thing. And I love this idea of cash as anti-capitalist. Part of our project is at Money on the Left and Money on the Left Editorial Collective is to sort of recover democratic public potentials of money. And so I guess I want to say that one of the interesting things about reading your book and engaging with your work, is that it seems like you’re into that, too. 

But you’re also– correct me if you think that I’m wrong– like somebody could read Cloud Money and think that you’re sort of after a post money world, you’re partisan for cash, you’re defending it. That’s not necessarily saying money itself is good and could be used and mobilized in an affirmative ways. 

Scott Ferguson:  And just to clarify, we’re not saying money is good. 

William Saas: Oh, yeah. 

Scott Ferguson: Or that the system now is good. But we’re saying that it is certainly not just flatly evil. And that it is a powerful and capacious medium for collective transformation and democratization. 

Brett Scott: Bear in mind, I don’t have a sanctimonious take on monetary systems like many monetary… they’re are parts of the sort of monetary reform community who had this almost visceral sort of puritanical disgust about money and so on. I don’t have this at all. I see the world in contradictions. I understand that we’re stuck in systems that often we don’t quite know how we’ve ended up in these systems. And there’s trade-offs built into these systems. So for example, in large scale monetary systems, one of your trade offs is that you’ve increased the scale of your economy, and thereby actually gives you access to more and more stuff, but simultaneously increases your alienation, your distance from each person. And you can even imagine, the opposite of this is extremely small scale economies, where you might not even have monetary systems where you have very low amounts of stuff, because you’ve got very low labor pools we’ve connected together. But you have a very, very strong idea of who you are and where you are in the economy. If you picture your sort of quintessential hunter-gatherer type of setting you’re under no illusion as to what your position in that economy is and how you survive. Whereas of course, if you go to an extremely large scale economy, held together by large scale monetary systems, you’re in this much more sort of alienated state, and yet, you have access potentially, to incredibly high end things because you’re tapping into gigantic pools of global labor that you can’t see. 

And this is a sort of contradiction we find ourselves in modern economies. And so I’m not really trying to say that we could live without the monetary system at all. But you know, kind of going back to the nervous system metaphor, there’s a part that didn’t actually make it into the book. That was extending the metaphor. Actually, it did make it in a little bit of a conclusion. But what am I arguing in terms of the cash system and the nervous system metaphor, as I say, in the human body, the nervous system is split into a central nervous system, and the peripheral nervous system. The central nervous system is a realm of like the brain and like the spinal cord,  it’s a very conscious part of you. Whereas the peripheral is a sort of well, as the name says, is peripheral, right. 

And I’m kind of arguing that if we’re taking this metaphor, seriously, the financial sector, and all these kind of digital systems that are connected into it, are part of the sort of central system whereas the cash system can be understood as a the peripheral nervous system, is the movement of this money depends on the sort of person to person contact. Now, I don’t have to go deeply into that metaphor, but the basic idea is that if you’re interested in creating a balanced monetary system, you’ve got to think about how all these different parts intersect. 

And if you think about alternative forms of money, like the mutual credit system that you’re mentioning, the sort of rippling credit systems or local currencies, you can almost imagine those as kind of an…I don’t want to go like too deeply into this nervous system metaphor, but part of the autonomous nervous system is kind of like semi autonomous things that like act by themselves, and I kind of like only partially integrated into the central system. And so I’m interested in future… to think about, okay how do you know, because what we call the “cashless society” would essentially be a type of system where you’re completely always plugged into the central system. 

You’re always going by the banking sector, and the sort of big tech companies. And the cash system actually is maintaining this kind of lack the ability to stay out of that central system whilst remaining within the overarching economy. And that’s what’s kind of the political dynamic of it. But then in terms of the actual political message of the book, the main message is to protect the cash system. But there is a part of me that’s maybe this is for a different book, which is arguing for people to build different systems entirely the sort of like alternatives, and you know, I can go into those if you’d like me to.

Scott Ferguson: Well, maybe we’ll have you on again to talk about that future book. But I think we would be doing a disservice to this book if we didn’t ask you to talk about cryptocurrency. But so what’s your… Yes, crypto tokens, not currency. What’s your experience with crypto tokens? What’s your assessment of crypto tokens? And also, what are your thoughts about the recent cascading crashes in those crypto markets?

Brett Scott: Yeah, I mean, crypto, I could say so many things about crypto. Well, the first thing I’ll say is that actually I was involved in early, early Bitcoin back 2011, 2012, 2013, 2014, which was quite a different time in the modern world where it was far more innocent in a sense. It hadn’t turned into a giant, grotesque, speculative marketing/grifter scene. It was an interesting moment to be in it. I kind of got involved in that, because I was… I’d written this other book, the other The Heretic’s Guide to Global Finance that was coming out back in 2013. But I was interested in general in people’s attempts at building alternative forms of economy. And obviously, crypto was one of these attempts. So my inner anthropologist was really fascinated by this, and as you know, doesn’t have any potential. But what became very, very apparent to me, and that’s the crypto world or the Bitcoin world in particular, was that you had this sort of political problem, which was that the actual underlying technological architecture was quite radical. 

The core technological feat is basically that it enables large networks of people who don’t know each other to coordinate action between themselves without a central player. Now, that politically is interesting. And actually, a lot of groups can agree that that’s interesting. And, in particular, it was about these people being able to issue tokens, or at least for the system to issue tokens. And then for them to be able to move those tokens between themselves. And this is where all the problems started to emerge, because that was a sophisticated technological architecture, but a very, very crude token system implemented on it. But many people who had no training in any kind of like monetary stuff, visually the token sort of like superficially resembled monetary system. 

And actually, in many ways the imagination that Bitcoin is a monetary system was created through linguistic hacks and visual hacks. So the very term cryptocurrency was the first one of those, but the fact people just started calling it crypto currency. And journalists would report on it as if it was this currency. And then all the visual imagery that was pasted over it as being a monetary system, and many people just sort of took it for granted. They’re like “well, this is a new monetary system”. And what was particularly interesting with it, when it started getting $1 price, the thought of getting price, this in a way kind of just confirmed for people somehow that this was a monetary system, which is very, very fascinating. Because many things that have prices, people don’t perceive as money. 

So it’s not like if I have a ceramic vase, and it gets a price on the market, I don’t fully think about it as a monetary system. But if I take that ceramic vase and I paint monetary imagery all over it, and make it very small and sort of like a disc shaped, suddenly you can be like, “well, it’s money, isn’t it?” And this is actually sort of psychologically literally what was happening in the Bitcoin world, you had these digital objects, which were kind of pasted with this monetary branding and which had a price, and which then superficially, kind of started to resemble a monetary system. And since then, I started writing this about how crypto counter trade works. I don’t know if you guys have sort of seen me doing that. 

But it’s basically saying, well, what’s happening in the crypto markets is you basically have these digital objects that are created, that are then traded on speculative markets, and which get a price on those markets. And once I have a price, you can then swap them with other things that are prices. Which is essentially a way of clearing that sort of money priced things against each other which is counter trade. Now, if I did that with two objects that obviously weren’t money… so for example, if I took a $500 vase and I swapped it for a $500 guitar, nobody would say to me, “oh, the vase is a monetary system”. 

What they would say is you’ve swapped something that’s worth $500 for something else that’s worth $500, implicitly, what you’ve done is you’ve sold the vase to the person who has the guitar, and then you’ve given them the money back to buy the guitar from them. So you’ve had these separate monetary transactions that have been superimposed over each other, giving rise to the barter-like scenario. Okay. I don’t know how clear that is. But that’s concentrated and the whole Bitcoin world works like that. And I know this, because I used to do. I used to buy, quote, unquote, “buy things” with Bitcoin. And this is exactly what you do. You take its current dollar price, compare it to the price of the thing you’re trying to, quote unquote, “buy”, and then you would work out the ratio from that. And this is countertrade. 

And I think this is really, really fascinating actually, because what the Bitcoin system effectively is, is a type of parasite. It’s a kind of monetary parasite. And if we, you might want to think about the US dollar system as being like a host, in a sense. It can’t actually survive unless it has this pricing. The ones that have it, it’s able to sort of do the sort of money-like kind of thing within that system. And I actually think that’s an incredibly interesting design and in a way, that’s not even a critique. I’m sort of saying, well, kudos in a sense. You’ve designed a monetary parasite. That’s very interesting.

Scott Ferguson: But you can expand this out and say, from an MMT framework, at least, there are degrees of moneyness that exist in all kinds of credit systems. So we often will refer to airline miles, which have different degrees of receive ability and liquidity. So, to a certain extent, you can kind of de-exotisize size, if that’s even a word. De-exotisize crypto, it’s just sort of another, dependent system that depends on this larger system. And then it becomes a question of, but how does this system work? What are its values? What are its social and ecological consequences?

Brett Scott: In my newsletter, I do a lot of analysis of these different types of… if I’m looking at a voucher, for example, let’s say. Airline miles kind of have a sort of voucher-like vibe because they’re redeemable back for a particular thing. So let’s say I have a voucher for a store for a particular thing. Like, I don’t know, a Starbucks voucher or something. In a sense, it’s tethered into the actual monetary system, right? It’s like you and you kind of like it has an issuer, it has a redemption process. You know what you’re gonna get if you hand the voucher back, so it’s very easy to kind of integrate that, and it’s quite easy to describe how it works. 

Scott Ferguson: And the production system, I think as well. It’s tethered into the production system of coffee and of airline vouchers. 

Brett Scott: Vouchers are a credit system. There’s an issuer, there’s a redemption process, and particularly, maybe be able to transfer them. So all credit type systems or IOU type systems have this sort of three part process as an issuance process, some of the issues and out as a kind of promise, then they might be able to be transferred depending on what the nature is, and then they’re redeemed back for the thing that they can supposedly can get. Vouchers are like that. Bitcoin is nothing like that. There’s no ability to redeem Bitcoin. It doesn’t actually even have an issuer. 

If you look at how it’s structured, what happens is you could sort of argue that the miners and the system are kind of like issuers. But they’re issuing it to themselves, they’re not issuing it as a liability. So what happens, they basically exert energy and then write out a number as an asset for themselves. So they’re basically… it’s literally numbers written out off the exertion of energy, which then are then branded in a particular way. But they’re written out as assets to the person who is successful at maintaining the system. And then it has no redeemability. There is no liability side to a Bitcoin token, it’s just this object. But it superficially has the visual appearance of what you would see in a bank account because it has this number. 

So it kind of looks like a bank account, sort of, but it has no actual liability structure. So this is what’s quite interesting. So really, what it ends up being is it’s kind of like branded collectible. With the monetary price which you can swap for things and that does actually have a certain degree of moneyness in the sense of it’s highly swappable. So it’s actually quite like liquid in the way it moves around in a sense. So this is why Bitcoiners get very angry with me when I say it’s not a monetary system. And I don’t have any problem with that. I’m just like, well, it’s not used for pricing. And it very, very clearly… one of the easiest ways to sort of see this like… El Salvador is currently being used as an example of a place where Bitcoin is used.

 But if you go into an El Salvadorian restaurant right now, I would love to see an El Salvadorian restaurant where they put up a fixed menu on the wall with fixed prices in Bitcoin for things. They won’t do this because actually the stuff there is priced in US dollars to work out the quote unquote “Bitcoin price”, they’re always gonna have to constantly check what the US dollar price of Bitcoin is, and then work out a countertrade ratio. So actually, if you go to eat a meal in this restaurant, the price of a meal, you’ll quote unquote, “Bitcoin price” of this meal will change constantly. Because the actual price is in US dollars and it’s constantly being refracted through Bitcoin. That’s a kind of complicated way of saying it. This is a very good example of… clearly the US dollar system is being used here. But you’re kind of disguising it via Bitcoin transaction.

Scott Ferguson: We actually have an episode of one of our other podcasts coming out that’s going to come out before this interview, actually, where we’re interviewing a professor and journalist named Ricardo Valencia, and he is reporting on this Bitcoin situation in El Salvador. And there are protests against this. The president of El Salvador is becoming increasingly authoritarian and wedding his authoritarian politics to this Bitcoin adoption. Bitcoin is not being adopted well in the country. They’re trying all kinds of things, like offering discounts to make it receivable, and people don’t use it. People don’t want it.

Brett Scott: I mean, he’s obviously heavily invested. And actually, it’s quite interesting. I mean, he’s an interesting character, because he’s clearly working the US libertarian scene to get forms of financing and funding, but, probably is doing it with a sort of… probably my intuition was well, we got nothing to lose, we might as well just try and work this angle. I think, in a sense, him aside, the Bitcoin community has quite a lot to lose from backing him. 

And I think a lot of them sort of threw themselves into this kind of euphoria, it was like, “ah, it’s become a legal tender, it’s now the official money” and ignoring all these… not only the protests, but also the fact that in reality, it’s the US dollar that is being the actual… it’s happening since this countertrade process. But now it’s becoming politically difficult to the Bitcoin community, because the whole sort of rhetoric has always been around this like stateless money and this whole kind of thing. So the reality of backing this increasingly authoritarian leader is an interesting one.

Scott Ferguson: So do you have a read of the most recent failures in the crypto markets?

Brett Scott: Not really. Actually, I’ve kind of got bored about following all the specifics of it. A lot of my focus has been on critiquing the ideology of Bitcoin, because… and so the broader crypto scene is going out, a lot of people are being involved, and I know lots of people in it, but the actual sort of downturns I don’t follow. I used to work in financial markets. The way I often see these crypto tokens is  in typical financial markets, you can do fundamental analysis, and you can do technical analysis. Fundamental analysis, you’re looking at the reality of something or trying to look at the reality of something and saying, “well, this is, this company is overvalued, for XYZ reason, they haven’t actually built the factory that they said they were going to build, nobody’s gonna buy their products”. 

So you actually make these little arguments, but it’s actual prospects in the world. And then work out from the projected income streams, and you can sort of work out a theoretical price for a share. That’s a fundamental analysis. And then there’s technical analysis, which is like you watch what other people do, basically. Abstracted through graphs. But basically, technical analysis is just watching what other people in the market are doing. Now, whereas in the crypto world, often the only thing you can do is technical analysis. There’s no way to do fundamental analysis of these objects because they’re not redeemable for any particular thing. 

They’re not legal claims upon anything. There’s no way to work out if they’re overvalued or undervalued. They’re just floating objects, which makes them highly prone to these breakdowns. So I’m never surprised when there’s like a massive spike in the price or crash in the price either. Precisely because they’re untethered to slack. But in terms of the stable coins that were breaking down recently, I suppose that’s a slightly different situation. But like yeah, I didn’t… What’s your take?

Scott Ferguson: I don’t have one. I appreciate your blase attitude. I think you you have your eye on the structural, larger anthropological, political, ideological, 

Brett Scott: Gets boring.

Scott Ferguson: Yeah, rather than following the roller coaster ride and pretending that that’s actually…

Brett Scott: I think what’s probably the best way to analyze it is probably through religious studies. Or like, yeah, a lot of what’s happening in the crypto markets is you have these… And I think there’s interesting sociological ways of analyzing it that are far more interesting than trying to have some economic analysis of why the price has gone up or down. There’s many, many people who feel sort of forms of existential despair in the world who have come to believe that somehow the crypto thing represents some way to escape that and then engage in this fantasy where you can make returns whilst also bringing down the system somehow. So no, actually I empathize with that to some extent. 

There’s part of me that has a certain degree of empathy for people who are caught up in it. Because I have a lot of friends who are caught up in it and they can see this as hope where you can engage in political activism through speculation.

Scott Ferguson: And there’s also a lot of pain and suffering. There are suicides. There are people losing a lot of state money. 

Brett Scott: Yeah, and the main concern in the crypto world because… look, bear in mind that speculation has been going on for a very long time of the capitalist system, this has nothing particularly new. And so I could do a critique of speculation. But I’m not that interested in doing that. Other people can critique the mentality of speculation, it’s well established as a phenomenon within capitalist societies as people trying to get rich quick and escape their situations and so on, whatever. My main concern is that in the process of marketing the speculative objects, a particular narrative about money is projected into society. So the Bitcoin community, those objects… the Bitcoin tokens are not actually a monetary system. 

They’re this collectible, almost like digital medallions branded as money with a monetary price. But in order to get them to compete upon a market against other assets, like shares, or whatever else you could potentially buy with your disposable income, the proponents of it have to market it as a competing monetary system. So its marketing pitch is that some are competing against the dollar. And in order to market that story, they have to create this conservative story about money where they sort of say, money should be this constrained thing, this commodity that’s held taut and rigid. And so it has a sort of weird, puritanical, hard money ideology that goes along with it, which is very heavily associated with libertarian ideology. 

Which is all about engaging in the fantasy that markets exist independently of states. Which requires this fantasy of apolitical money. But you have to have this… the monetary system is somehow natural. And markets are natural, and the states a parasite upon the market, rather than the thing that actually underpins the market with monetary systems. So a lot of the sort of fantasies in the crypto world are about projecting this conservative notion of money, which my concern is that the debt then becomes a big… that’s become the foundation or mandatory training for young people right now. 

Interestingly, the MMT movement is one of the counter narratives in terms of like trying to create a different narrative around money, but there’s lots of 16 year olds right now who basically sitting on crypto forums because they believe it’s technologically exciting, and so on, who sort of imbibing like Murray Rothbard, and stuff like that. You know, if you think about if you’re a conservative strategist from the 19th century, you will like be like, “wow, this is like a really amazing way of projecting ideas into society without actually having the monetary system disrupted”. So it really empowers the Conservatives within the ordinary monetary system. So that’s my concern. Long answer, sorry. 

William Saas: No, that’s perfect. I love the fundamental versus technical analysis. And I think that that’s… it’s almost like if you have the fundamental mental analysis that I think we all share here, then it sort of makes the technical analysis irrelevant. It’s like okay, this is just going to be a carnival. It’s something to watch. And people are gonna suffer. But they have… there are contending fundamental analyses that do kind of seem to… I don’t know, I guess you can be suspicious here and wonder how many people are actually invested in the fundamental analysis that would enable them to think cryptocurrency is actually a viable alternative to existing monetary systems. What’s your read on how many people are actually sort of wedded to that now versus at the sort of speculation side if we’re not going to speculate about speculation.

Brett Scott: Well, I think it’s contradictory because… actually I actually wrote this piece for CoinDesk, which is one of the big crypto publications, possibly the biggest one, actually. And that CoinDesk actually has… there’s a couple of editors there who actually are quite reasonable, critical and want more critical voices. And I did this piece was just called How to Win a Bitcoin Street Fight. And it was based on the old arcade game Street Fighter. And I basically talked about walking into an arcade, an old arcade game. There’s on the one side, you got Street Fighter on the other side, you have Mortal Kombat now to old school like fighting games, and each one has its own universe. Each one has its own like characters in it. All right, so you know, Street Fighter has… I forget the names of the different people. 

William Saas: Ken, Ryu, Blanka. 

Brett Scott: Yeah, exactly right. And then you know, more you can do Mortal Kombat, Mortal Kombat got Raiden and all these other characters. But once you pick a game you can’t use a player from one of them in the other game. So they were sort of sitting in separate paradigms, and they’re in their own universes. And I think in the Bitcoin world, you find this a lot of the argumentation is based on this sort of trickery, paradigm switching trickery. Because on the one hand, it’s marketed as being that who it’s competing against is the dollar. So this is like the monetary story. So this is like one arcade game, right? That it’s like somebody’s competing monetary system. On the other hand, it’s marketed as an asset within a monetary system that has a monetary price that you could trade to get more money. And in that sense, it’s actually competing against things like the Gamestop shares, or the world or whatever else. Because if I’m spending my $5,000 in savings on Bitcoin, I’m not spending it on Gamestop shit, right? So they’re in a sense competing each other. 

But what happens in the crypto world is that they often try to blend those two arguments together. They’ll say things like, “well, when the price of the asset is rising, it’s a symbol that in the future, it will sort of invert and become the monetary system”. Which is… I’m like, how did you work that out when other things rise in markets, that doesn’t mean that becomes a monetary system. So there’s lots of this sort of justification. And because the actual object being traded has monetary imagery branded over it, it’s quite easy to actually sit with that cognitive dissonance. And many people in the world constantly sit in the state of cognitive dissonance, where they have a sort of almost millenarian story that at some point, it will invert, and everything will become priced in it. 

But in the meantime, we’re trading it for US dollars, and clearly perceiving it in terms of US dollars. And when I say this will happen, you’ll meet some of the hardcore Bitcoiners will be set will say stuff like, “well, I price everything in Bitcoin”. And I’ll be like, well, it’s interesting, because those prices will be constantly fluctuating, right? And what often will say to them is if I’m sitting by a tornado, and there’s like things flying around the tornado, you know, whatever it is… people’s bits of debris, I can psychologically choose to believe that actually, the tornado is flying around the pieces of debris. 

I could imagine the pieces of debris being like fixed points and then perceiving the tornado flying around. But that’s like a mental illusion. You can choose to believe that everything is priced in Bitcoin, but it’s a total mental illusion, right? It’s actually priced in the dollar. And if you’re just choosing to try and see it in this way. And this is a lot of what’s going on in that community. Just another metaphor there.

Scott Ferguson: Well, I think that’s a really… let’s finish this conversation on that mind whittling metaphor. Where do our listeners find you? Where Where should they look for you?

Brett Scott: Well, my newsletter is BrettScott.substack.com. Altered States of Monetary Consciousness. My book is Cloud Money: Cash, Cards, Crypto, and the War for our Wallets. And my Twitter handle is @SuitPossum: S-U-I-T P-O-S-S-U-M. I always get asked how that one came about.

Scott Ferguson: Are you gonna tell us?

Brett Scott: It’s kind of a weird story. I had a musical act, Apocalyptic Possum and then from that a nickname developed called Soul Possum for me. And then when I went to work in the financial sector, I had this girlfriend at the time who said, “now you’re super awesome”. So that’s how it developed but when people see it nowadays, I have no idea what it is. It’s just weird…

Scott Ferguson: Right. That’s great. Well, now all the Money on the Left listeners who have made it to the end of this interview are all cued in. Well, thanks.

Brett Scott: Thanks a lot. Nice chat.

* Thanks to the Money on the Left production team: William Saas (audio editor), Mercedes Ohlen (transcription), & Meghan Saas (graphic art)